Global Currency Trends and 2016 Currency Projections
2016 has not started off great for currencies around the world given the free fall of the China market and given that their volatility is supposed to continue throughout the year. This will prove a challenge to currency values and will make 2016 currency projections difficult, but will provide tremendous opportunity to trade volatility. The market itself is an issue with regard to economic stability in China as their growth continues to slow, but there is potentially an underlying issue that may shape trends and projections in both the equity and currency markets.
All economies slow, but the depth of impact is based on the size of the economy and the reach it has in global markets. China is #2 so the impact has the potential to be severe. Similar to that of the Great Recession in the United States, China’s economic stability is on the verge of collapse into a mirror image of our own financial crisis. Alone, this is bad due to the economic impact, but is at least predictable for purposes of trading.
Where there is potential for dramatic difference between the illusion of China’s slowing and what is reality lies in their currency policies. Specifically, the renminbi has been devalued multiple times by the government and this is cause for warning signs in both the currency and equity markets. Any time a country attempts to stave off financial crisis by manipulating its own currency, things are usually worse than they appear.
By devaluing currency, the government is working to pump money into the system and to provide liquidity to starving markets. Sound familiar? The currency manipulation is not necessarily the issue since most governments use this as a tool to provide liquidity. Where the real issue lies is that we do not know the depth of China’s difficulties and, given the size of their economy and the global weight that it carries, unknown is not good. We won’t know how far down the rabbit hole we will have to go to get to the bottom. Equity markets understand this and the result is 400 point slides.
The problems arise when you combine fiscal weight abroad with overaggressive interest rate hikes here at home coupled with extremely low inflation rates and stagnant growth. Add in a dash of unknown presidential candidates and you have the recipe for potential disaster.
For currency markets and currency projections, 2016 will be highly volatile with a propensity for the dollar to climb against most other currencies due to flight to safety. Additionally, currency manipulation will continue to hamper trade deficits as our trading remains purposefully unbalanced. Bond interest rates are already decreasing as the demand for investor safe haven climbs. Should the pattern continue as expected, traders will see growth in the value of the dollar with downward pressure on the Euro and related currencies. Also, should this trend continue, expect to see government intervention along the way working to inject liquidity, especially if the downward trend on China’s economy continues.
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San Bernardino, CA
For us here in the States, the tragedy in Paris hit a nerve that was extremely painful and one which resulted in grief and a sense of loss as we endured the fanaticism of jihadists close enough to feel the pain, but far enough away that the impact was a little less severe. My heart goes out to all of those who lost innocent lives from all countries and all walks of life. Senseless.
In Southern California, it is in our face and the horror of San Bernardino reminds me of 9/11, not in the scale but in the irrefutable hatred towards the West held because of faith. My heart and prayers go out to those families in San Bernardino impacted by this horrific act. This community is about an hour or so away from where I live, but it could have been on the other side of the country and the pain would still run as deep. How can the senseless murder of innocent lives be a call to action for any religion?
Out of the pain and suffering by the families of those lost and those whose lives are forever changed, especially in San Bernardino where the pain is fresh, out of the tolerant and giving nature of the American people and out of the fact that our nation was born Christian, it is time we take a stand. I predict that the repercussions of recent heinous actions will negatively impact peaceful Muslims around the world, but make no mistake, we are at war and unless we wake up this battle will be fought without us and we will lose either way.
On the one hand, we will lose if we allow the jihadists to gain any type of foothold where they can continue to wreak havoc through these ‘lone wolf’ attacks and other cowardly acts against innocent people. At some point we will either have to stand up and fight or we will lose a far more important battle – our freedom.
Listen to the Democrats, including our ‘leader’, who assail the Constitution at every corner by crying out for gun control. San Bernardino is just the tip of the iceberg if we continue to let the government usurp our rights one-by-one. Do we really think that criminals and jihadists will pay attention to gun control laws? Really? They pay attention and laugh as we give our rights away. The problem we have is that people don’t look two to three moves ahead of what happens when they tout gun control as the answer to our problems, but this is a symptom of a far larger problem.
As an aside, law abiding citizens who want to carry a firearm and be responsible for keeping the peace in this nation are not adversaries of the police, but rather allies for our outnumbered men and women in blue. There are multiple case studies that prove this model. Texas and Florida are just two. Google ‘concealed carry weapons and crime rate’ and you will find a plethora of information on how crime rate drops significantly in proportion to the number of concealed weapons permits.
The far larger problem in our nation however, is that we are willing to give up our freedoms in order to be ‘protected’ by our government. This is short-sighted but is also prevalent as we burden our legislative and judicial system with more laws and more regulations that make it impossible to keep up with our legal system.
Don’t get me wrong, I am all for societal order and the amazing job 99.9% of our law enforcement performs on a daily basis, but they are getting overburdened and the bad guys are starting to understand this. So what do we do as a nation? More legislation? That doesn’t seem to work as we have the highest per capita inmate population in the world. Take away the rights of the many to control the deeds of the few? That doesn’t seem to be working, but they keep trying. So then what is the answer? The old adage rings true, ‘An ounce of prevention is worth a pound of cure’.
We stand up as individuals and take responsibility for our actions. We hold others, including officials accountable, but more importantly, we hold ourselves accountable. We plug God back into the system. This is how we were founded and what makes our country work. We take pride in our work and we strive for greatness once again. The world doesn’t owe us anything.
This is America. We are a nation built on Christianity and if you don’t like it, leave. I will not kowtow to people who are offended anymore. Get over it. I will not give in to those who want to tear down this nation. I will defend it. I will not fear evil, I will face it with the knowledge and truth that I am saved. I will not settle for a second-rate, entitled nation. I will strive to do my part to make it great again.
God Bless the families of souls lost to terrorism around the world, regardless of whose hand was involved. This is a point in time where we either rally and take a stand against the atrocities or we let them continue uninterrupted and live life fearfully letting our government be our protector, eliminating our freedoms slowly, one-by-one.